May 7, 2014

Proprietary and Confidential

© 2014 Harland Clarke. Acquisition Accelerator is a registered trademark of Harland Clarke. First Touch is a trademark of Harland Clarke. All other marks are the property of their respective owners. All rights reserved.

Acquisition Accelerator® Secure Low-Cost Core Deposits Before the Competition Heats Up

Presenters: Erik Kelley, Senior Product Marketing Manager Michael Dorrington, Director of Sales, Mail Innovation

Meeting reference materials will be provided within one week of this webcast

Why Valassis & Harland Clarke

●  Harland Clarke acquired Valassis in February 2014

●  Combines Harland Clarke’s financial institution marketing expertise with Valassis’s proven ability to effectively, intelligently deliver media campaigns for the country’s largest advertisers and marketers

●  Deep and tenured customer relationships with the largest financial, consumer products and retail institutions worldwide, offering clients a broad portfolio of innovative products and services

●  Acquisition Accelerator, a checking acquisition solution for financial institutions, uses the Valassis proprietary segmentation clustering product to target potential account holders

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●  Appropriate product focus with upsell strategy

●  Targeted and consistent direct mail – top of mind

●  One-to-one segmented communication

●  Low-cost delivery

●  Perceived high-value gift or incentive

●  Well-executed account holder referral program

●  Mystery Shop & Sales Training provided

●  Strategy, not a promotion

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Key Drivers of a Successful Harland Clarke Program

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NIM on average combined deposits1 $ 700.82  

Average debit card users interchange2 $ 60.00  

One NSF per year3 $ 30.00  

Total annual value of a checking account4 $ 790.82  

Average Cost to Acquire a New Checking Account:

$4425

Value = NIM on Combined Deposits + Interchange on Card Transactions + Fees

The Value of a New Checking Household = $790.82

1 Harland Clarke Industry Database, Average Total Consumer Deposits for Checking Account Holders- $19,096

2 FDIC, Second Quarter Banking Profile, Average NIM- $3.73% 3 Javelin Strategy & Research, Debit Card Average Interchange- $60 4 Moebs Services, Average NSF Fee- $30 5 Callahan *& Associates, Average Cost to Acquire a New Checking Household - $442

Why Checking Household Acquisition?

●  Deposit rates will rise soon and, when they do, low-cost deposits will be at a premium

●  Money Market balances will likely move to higher yielding vehicles

●  CD balances will become more expensive, driving up the cost of funds

●  Regulators are stressing banks' deposit bases during examinations and are paying great attention to liquidity and how deposits might behave when rates eventually rise

●  Adding new checking households provides additional cross-sell opportunities for our clients to increase their net interest income

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Checking Acquisition Process

HC/Valassis’ Unique Approach

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$

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Identify | the Target Account Holder

2,000 Real World Data Points

Sharpshooters®

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Examples of Available Resources for Financial Clients

Syndicated data variables identify the best account holders where they live

Identify |

Geographic Alignment:

Radius (3-7 Mile)

Market-Level Coverage

Forced Inclusion/Exclusion

Efficiency Factors

Consumer Behavior/Spending:

Financial Services

Investment Allocation & Methods

Insurance

Other Professional Services

Income/Worth/Demographic Variables:

Median Household Income

Additional HHI Breakout by Age/Ethnicity

Household Net Worth

Home Ownership

Employment Status

Education/Degree Achieved Home Characteristics:

Breakout of Apartments/Single-Family

Median Home Value

Length Lived in Home

Median Age of Homes

Value Scores/Creditworthiness:

Group A – Most Creditworthiness

Group B – Above Average Creditworthiness

Group C – Average Creditworthiness

Group D – Below Average Creditworthiness

Group E – Least Creditworthiness

While syndicated data is extremely useful, we consider client data as the best possible source for building an optimized targeting strategy

●  First and only clustering system built at the postal carrier-route level

  Facilitates low-cost direct mail

●  Emphasizes ethnicity and urbanicity attributes

  Clusters more accurately portray differing account holder segments

  Provides more advanced targeting and more effective versioning

  Achieves better response

●  Provides advanced targeting for increased account holder response and distinct competitive advantage

●  Connects census to postal geography

  Clusters assigned at the CR level

  Distributions tabulated for the trade area

  Information updated monthly to reflect changes in the boundaries of the trade area

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Identify | Sharpshooters™

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Identify | Sharpshooters

Methodology

●  Each cluster represents a unique combination of demographics and lifestyle characteristics

  Ethnicity

- Dominant Ethnicity

  Affluence

- Median HH Income

- Median Home Value

- Median Years of Education

- Occupation

  Generation

- Dominant Generation

- Median Age

  Life Stage

- Marital Status

- Presence of Children

  Environment

- Urbanicity

- Home Ownership

Targeting Application Notes

● Develop targeting plans from a client's account holder files when only the address is available

●  Shows multiple buyer groups for a product, brand or retailer to develop versioned targeting plans

●  Not recommended for targeting specific clusters by appearance only

●  Updated on a quarterly basis

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Identify | Sharpshooters

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Geography Trade area, radius around store, etc

Habits, hobbies, etc

Annual spending (HH) estimates for a variety of consumer products and services (e.g., Financial Services, Tires, Auto Service, etc)

Penetration and specific demographics within ethnic segments

Account holder addresses can be used to identify areas of high ACCOUNT HOLDER penetration and also use cluster segmentation based on look-a-likes

Valassis Sharpshooters clusters (look-a-likes)

Nielsen® variables based on age, income, children, # of vehicles, etc

Go

od

B

ett

er

Best

Not all account holder addresses are created equal, nor do they bank equally

Adding balance data allows the process to identify areas of high DEPOSIT penetration

Demographics

Ethnicity

Behavioral

Purchase Potential

Lifestyle

Database-Account Holder Penetration

Database-Sales Penetration

Client Supplied ZIP Rankings

ZIP Priority based on client-defined metrics

Can also use distance/proximity as a key driver

Identify | Targeting Continuum

Identifying a Client’s Target Market Group (TMG) •  Client’s address data rolls up to the Postal Carrier Routes (PCRs), where the address resides

•  Key Metrics gathered at cluster level from single assignment at PCR level

o Customer Penetration

o Balance Penetration

•  Account Holder-level data provides an extra level of validation – being dependent on an action/sale

•  TMG identified as clusters that “outperform” the market – client metric used is greater than the market % of HH identified

Account Holder Look A Like Report (Example)–

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Identify | Sharpshooters

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Using Sharpshooters as a Targeting Activity Potential (TAP)

•  Collection of variables created to target brand-specific account holders across a wide variety of industry categories including financial services

•  Each cluster receives a score

•  Market Plan can be National, Regionalized or Market-Based

•  Includes the value of all cluster HH in the trade area to be counted

●  Snapshot displays the score for each of the first 12 clusters vs. identifying clusters as the TMG

●  Applies clusters’ index scores to cluster HH within the client’s trade area to build geo score

Identify | Sharpshooters

Locate | Targeting Methodology

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Map Your Branches

Overlay Your Account Holders

Target the Best Neighborhoods

•  Client provides existing checking account holders assigned by branch

•  Sharpshooter Potential Index and Account Holder Penetration Index for the defined trade areas

•  Account holders are assigned to the closest branch if held by multiple branches

●  Pinpoints geographies to target and to exclude

●  Shared Mail & Solo Mail combined for efficiencies

Reports and Maps will be provided

Locate | The Final Targeting Output

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Personalized advertising messages are relevant to individual residential addresses

Customer Andy Eisenberg

would be interested in Mobile Banking

PROSPECT Juanita Smith’s Family

just moved to town and is looking for a

banking partner

Prospect Susan Lutz’s

small business is expanding and

needs more banking help

PROSPECT Diane Johnson

doesn’t like how current bank

treats her

Connect | Personalized Communications

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1:1  Messaging  is  Completely  Relevant  

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3  

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Current Account Holders

LOOKALIKES

Small Business Owners @ their homes

Mass Market

“Hey Andy, look at the checking accounts we have with mobile banking for you!”

“Diane, we have a better banking experience waiting for you.”

“Susan, your small business could use a partner like us.”

“Juanita, your checking account would be in good hands with us.”

●  Final mailings put through CASS (including DPV) and NCOA process

●  List refreshed weekly

●  Reporting includes deviations from client-supplied list

Don’t Talk to Everyone the Exact Same Way Connect |

Benefits

•  Sales data segmentation analysis identifies high-value households

•  Delivery analysis and recommendation refines the target audience

•  Database merge/purge eliminates duplication

•  Digital printing enhances messaging

Features

•  Address with resident name adds personalization

•  Personalized variable messaging tailors the message to the resident household

o  Look-alikes

o  Cross-sell existing account holders

o  Small Business

o  Client-specific segments

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Connect | Exclusive: Power Card Plus

Consumer Prospects: Basic Checking ●  Broadest appeal

●  Drives prospects through the door for upsell ●  Measuring stick

Business Prospect: Basic Business Checking ●  Cash Management ●  Merchant Services ●  Credit Cards

Existing Account Holders: Cross-sell ●  Debit Card Utilization ●  Mobile Banking ●  Mortgage ●  Thank you

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Execute | Products to Offer $

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Power Card

●  Personally addresses by name

●  4” x 9” postcard

●  80# cover stock

Power Card Plus

●  Variable imaging and messaging (all four pages)

●  10” x 8.5” (folded to 5” x 8.5”)

●  80# cover stock

Connect | Exclusive: Power Card Plus

What We Know About Personalization: 3 Fast Facts

Sources: National Mail It 2009-2011, DMA-Tracking Study; Broudy and Romano, 2009 Digital Printing Council Study

IIIIIIIIIIIIIIIIIIIIIIIIIIIII Jim Smith or Current Resident 1123 Maple Street Columbus, OH, 43215

Connect

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eRedēm: A Better Way to Offer Incentives

●  Choice of incentives, including cash

●  Increases program response rates

●  No risk - pay as you go incentives in most cases

●  Bridges generational gaps with incentives that appeal to multiple segments

●  Recipients make selections online from home, your branch or virtually anywhere

●  eRedēm is automatically mobile-enabled when accessed by mobile phone

●  Eliminates the need for in-branch inventory and allows the recipient to choose where they wish to ship the item

●  Lowers acquisition incentive expenses by buying down the costs

●  Strongly recommended

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Execute | Incentives and Fulfillment $

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Execute | Incentives and Fulfillment $

Messaging Through Multiple Channels ●  Automated, custom email communication

●  Supports online promotional messaging

Program Activity Aggregation

●  Data aggregated into one database for consolidated viewing

●  Forms for branch personnel and advocate self-service channels

●  On-demand program reporting available online 24/7

●  Data easily exports to Excel for easy sorting, detailed review and measurement

●  Easily merges data for program snapshot

●  Branches no longer required to report daily, or weekly, or forward referral cards to a central location for administration

●  Provides for easy program audits

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Execute | The Referral Program $

●  Consumers are in market for a new checking account all year

●  Have an offer in hand when the consumer is ready to act

●  Frequent communications increase brand awareness and put financial institution in the “selection set” when the consumer is ready to act

●  8 times a year

●  6.5 week cycle

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Execute | Timing and Frequency $

●  Training sessions for checking, as well as sales and services

  25 years of coaching and training experience

●  Mystery Shopping consists of up to:

  10 personal bankers

  10 call center reps

  Website evaluation

  Focus on sales & service

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Execute | Mystery Shopping & Sales Training $

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●  Results reported post campaign with extensive analysis

Execute | Results Reporting $

●  Branch Merchandising

●  Card@Once®

●  Onboarding

●  First TouchTM New Mover

●  New Account Research Services

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Execute | Complimentary Services $

Press *1 on your phone

-or-

use the chat window and send your question to “All Panelists.”

Panelists:

Erik Kelley, Senior Product Marketing Manager

Erik.Kelley@harlandclarke.com

Michael Dorrington, Director of Sales, Mail Innovation madorrin@valassis.com

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Thank You

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